Are real estate investors avoiding Chicago?
Local commercial real estate pros keep banging the drum about how the city and state’s fiscal woes are scaring investors away from the Chicago market. Some new data support that narrative. Single-property commercial sales in the Chicago area fell to $7.7 billion in the first nine months of the year, down 33 percent from the same period in 2019, according to New York-based research firm Real Capital Analytics. It was the biggest drop among the top 25 U.S. markets, and much larger than the 6 percent decline for the nation overall. In a recent article, “What’s Wrong in Chicagoland?” RCA searches for answers to that question. “There are great reasons to be in the Chicago market, but investors are clearly finding the market less attractive,” writes author Jim Costello, RCA senior vice president. “Is it unfunded pension liabilities in Illinois, uncompetitive labor markets, or high taxation driving the change in perceptions? Is it some combination of these and other factors pulling down the whole region?” Many landlords contend one source of the problem is Cook County Assessor Fritz Kaegi, who has jacked up assessments on commercial properties in the county’s northern suburbs. Seeing that as a precursor to big property tax hikes, some investors have decided not to buy in Cook County while others are just making lowball offers on properties, landlords say. The numbers give credence to that theory. Single-asset sales fell 42 percent in Cook County in the first nine months of 2019 from the year-earlier period, according to RCA. That’s the second-biggest drop for the six Chicago-area counties tracked by RCA. Only Lake County posted a bigger decrease, 44 percent, but Lake County represents a small share of the Chicago market.
Tags : INTERNATIONAL commercial real estate Chicago market Lake County